BP plc (ADR) (BP): This Company’s Latest Move Highlights Dilemma for Oil Companies

The bigger picture
BP plc (ADR) (NYSE:BP)’s decision to part with its wind power assets highlights an important trend among energy companies. Many are struggling to strike a balance between investing in projects with immediate payoffs, such as drilling for oil, and investing in those with longer-term payoffs, such as renewable energy.

Consider Royal Dutch Shell plc (ADR) (NYSE:RDS.A), for instance. After having invested millions of dollars into a major wind project over the course of eight years, it recently gave up. Citing “unfavorable market conditions” and issues related to “transportation logistics,” the company announced last year that it was pulling the plug on a proposed wind turbine project in Humboldt County, Calif.

Other integrated oil companies have also voiced their frustration in developing alternative energy sources. Speaking at an IHS CERAWeek conference last month, Exxon Mobil Corporation (NYSE:XOM)‘s Senior Vice President Michael Dolan discussed the company’s progress in producing fuel from algae, saying: “I think we learned in the first few years it’s probably harder than we had all hoped.”

In the end, shareholders prefer decent profits now, as opposed to the promise of greater profits in the future. Unfortunately, this very logical preference means that renewable energy development among oil and gas companies may have to be placed on the back burner for some time.

The article BP’s Latest Move Highlights Dilemma for Oil Companies originally appeared on Fool.com.

Fool contributor Arjun Sreekumar has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.